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Year Payment Type Emile Louise Total
1990 Salary $17,950 $17,950 $35,900
Bonus 525,000 525,000 1,050,000
542,950 542,950 1,085,900
1991 Salary 18,000 17,900 35,900
Bonus 375,000 375,000 750,000
393,000 392,900 785,900
1992 Salary 17,725 19,050 36,775
Bonus 250,000 250,000 500,000
267,725 269,050 536,775
Respondent determined that the bonuses which petitioner paid
to Louise and Emile were unreasonable. Respondent did not adjust
Haff’s bonus because he worked long hours for the company as its
general manager in charge of its operation.
Accumulated Earnings
On November 26, 1996, respondent mailed by certified mail to
Goertz, petitioner’s authorized representative, a notification
under section 534(b) for 1990 through 1992.9 On December 16,
1996, petitioner responded to the notification with a two-page
letter. The letter referenced the family lawsuit and the probate
court’s ruling rescinding the 1961 transfer. Enclosed with the
letter was a copy of the probate court’s order rescinding the
transfer and several cases which petitioner believed supported
its position that the accumulation of earnings was not subject to
the accumulated earnings tax determined by respondent. Also
9 Respondent’s notification erroneously lists 1989 through
1991 instead of 1990 through 1992. Respondent concedes that he
has the burden of proof on excess accumulated earnings for 1992.
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